BP, Rosneft extend deadline for Arctic agreement

By OGJ editors
HOUSTON, Apr. 14
-- BP PLC and OAO Rosneft extended until May 15 an Apr. 14 deadline for completing an Arctic exploration and stock-swap agreement while BP continues working with a Swedish arbitration panel.

The arbitration panel blocked the $8 billion deal in a ruling that upheld a challenge by the Alfa-Access-Renova (AAR) consortium, BP's Russian partner in TNK-BP. AAR said BP's agreement with Rosneft violated a TNK-BP shareholder agreement requiring BP to involve AAR owners in its Russian ventures.

In response to questions from shareholders during BP’s annual meeting in London on Apr. 14, BP Chief Executive Officer Bob Dudley said, “We don’t believe we violated the shareholders agreement in any way.”

Under the stock-swap agreement, Rosneft was to hold 5% of BP's ordinary voting shares, and BP was to hold 9.5% of Rosneft's shares (OGJ, Jan. 24, 2011, p. 25). The deal called for creation of a joint operating company—66.67% Rosneft and 33.33% BP—to explore blocks covering 125,000 sq km in relatively shallow water of the South Kara Sea (OGJ Online, Apr. 4, 2011).

In an Apr. 14 news release, BP said it remains fully committed to TNK-BP as its primary business vehicle in Russia. BP also owns a 1.3% interest in Rosneft.

Speaking with shareholders, Dudley called Russia, “one of the world’s most important sources of oil and gas, as well as a massive market. BP needs to be there…. We will continue to pursue all further opportunities there where we can build value for our shareholders.”

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